Hard earned but decent returns – 2016 A$ corporate bond outlook
The year 2016 looks like being a battle between greed and fear with regards to Australian dollar corporate bonds’ performance. Greed will be driven by investors increasingly frustrated by falling deposit yields. Fear looks most likely to come from abroad, namely, prevailing low commodity prices causing rising defaults in the U.S and problems from emerging markets. The good news is that A$ credit spreads already capture some of this external fear. At the same time, the chance of widespread A$ bond defaults appears low. Investors in well-managed credit funds are set to get healthy returns for the default risk taken. The earnings, though, may be hard earned. Contagion from outside Australia could make for a bumpy, albeit ultimately rewarding, ride this calendar year.
Damien has around 25 years of experience in global credit markets. He has worked in Sydney, London, Hong Kong and Singapore. Much of Damien’s experience was gained from working with Credit Suisse both in Singapore and Sydney where he was Head of ...